SUBJECTS
|
BROWSE
|
CAREER CENTER
|
POPULAR
|
JOIN
|
LOGIN
Business Skills
|
Soft Skills
|
Basic Literacy
|
Certifications
About
|
Help
|
Privacy
|
Terms
|
Email
Search
Test your basic knowledge |
AP Microeconomics
Start Test
Study First
Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Oligopoly
Income Effect
Monopolistic competition long-run equilibrium
Average Variable Cost (AVC)
2. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Perfectly competitive long-run equilibrium
Excise Tax
Monopsonist
Private goods
3. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Monopoly long-run equilibrium
Spillover costs
Market power
Income Elasticity
4. The additional benefit received from the consumption of the next unit of a good or service
Marginal Benefit (MB)
Income Elasticity
Opportunity Cost
Perfectly elastic
5. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption
Normal Profit
Marginal Productivity Theory
Private goods
Marginal tax rate
6. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Price Ceiling
Perfectly elastic
Long Run
Economics
7. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Accounting Profit
Economic Growth
Monopolistic competition long-run equilibrium
Luxury
8. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good
Marginal Cost (MC)
Public goods
Utility Maximizing Rule
Price Ceiling
9. AVC = TVC/Q
Demand for Labor
Average Variable Cost (AVC)
Profit Maximizing Rule
Constant Returns to Scale
10. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Constant cost industry
Constrained Utility Maximization
Consumer surplus
Explicit costs
11. A good for which higher income increases demand
Non-collusive oligopoly
Normal Goods
Spillover benefits
Incidence of Tax
12. 0 < Ei < 1
Necessity
Oligopoly
Allocative Efficiency
Shortage
13. Exists if a producer can produce a good at lower opportunity cost than all other producers
Absolute prices
Income Elasticity
Comparative Advantage
Market Equilibrium
14. All firms maximize profit by producing where MR = MC
Profit Maximizing Rule
Consumer surplus
Marginal Benefit (MB)
Non-collusive oligopoly
15. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit
Decreasing Cost industry
Shortage
Marginal Revenue Product (MRP)
Monopoly long-run equilibrium
16. The practice of selling essentially the same good to different groups of consumers at different prices
Complementary Goods
Marginal tax rate
Price discrimination
Law of Supply
17. TR = P * Qd
Price discrimination
Total Revenue
Law of Supply
Diseconomies of Scale
18. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Constrained Utility Maximization
Comparative Advantage
Spillover benefits
Total Revenue
19. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run
Private goods
Four-firm concentration ratio
Accounting Profit
Shutdown Point
20. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry
Law of Diminishing Marginal Utility
Determinants of elasticity
Oligopoly
Economics
21. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Spillover benefits
Least-Cost Rule
Specialization
Producer surplus
22. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.
Total variable costs (TVC)
Explicit costs
Economies of Scale
Marginal Revenue Product (MRP)
23. Occurs when LRAC is constant over a variety of plant sizes
Profit Maximizing Resource Employment
Surplus
Substitution Effect
Constant Returns to Scale
24. Ei = (%dQd good X)/(%d Income)
Increasing Cost Industry
Constrained Utility Maximization
Income Elasticity
Monopsonist
25. AFC = TFC/Q
Allocative Efficiency
Income Elasticity
Perfectly competitive long-run equilibrium
Average Fixed Cost (AFC)
26. The difference between total revenue and total explicit and implicit costs
Producer surplus
Marginal Resource Cost (MRC)
Economic Profit
Law of Supply
27. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Allocative Efficiency
Complementary Goods
Monopolistic competition
Average Fixed Cost (AFC)
28. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Implicit costs
Average Fixed Cost (AFC)
Perfect competition
Spillover costs
29. A good for which higher income decreases demand
Determinants of elasticity
Economic Profit
Inferior Goods
Average Product of Labor (APL)
30. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Fixed inputs
Shortage
Economies of Scale
Normal Goods
31. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Income Effect
Price elasticity
Constant cost industry
Marginal tax rate
32. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Income Effect
Economic Growth
Marginal Productivity Theory
Market power
33. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Spillover costs
Total Fixed Costs (TFC)
Cross-Price Elasticity of Demand
Free-Rider Problem
34. Models where firms are competitive rivals seeking to gain at the expense of their rivals
Non-collusive oligopoly
Allocative Efficiency
Monopolistic competition long-run equilibrium
Economics
35. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market
Law of Diminishing Marginal Utility
Income Effect
Average Total Cost (ATC)
Monopolistic competition
36. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Total Product of Labor (TPL)
Shortage
Shutdown Point
Short run
37. The ability to set the price above the perfectly competitive level
Market power
Dead Weight Loss
Constant cost industry
Monopolistic competition long-run equilibrium
38. Models where firms agree to mutually improve their situation
Economic Growth
Perfectly inelastic
Collusive oligopoly
Absolute prices
39. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.
Decreasing Cost industry
Diseconomies of Scale
Opportunity Cost
Monopoly long-run equilibrium
40. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Absolute Advantage
Four-firm concentration ratio
Subsidy
Total variable costs (TVC)
41. Entry of new firms shifts the cost curves for all firms upward
Law of Supply
Oligopoly
Increasing Cost Industry
Resources
42. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Monopsonist
Determinants of Supply
Market Equilibrium
Opportunity Cost
43. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Cross-Price Elasticity of Demand
Public goods
Substitution Effect
Income Effect
44. Ed = 1
Total variable costs (TVC)
Price Elasticity of Supply
Determinants of Demand
Unit elastic demand
45. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Allocative Efficiency
Average Total Cost (ATC)
Diseconomies of Scale
Increasing Cost Industry
46. Exists if a producer can produce more of a good than all other producers
Monopolistic competition long-run equilibrium
Absolute Advantage
Negative externality
Consumer surplus
47. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Derived Demand
Implicit costs
Consumer surplus
Demand for Labor
48. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC
Cartel
Profit Maximizing Resource Employment
Relative Prices
Total variable costs (TVC)
49. When firms focus their resources on production of goods for which they have comparative advantage
Specialization
Four-firm concentration ratio
Perfect competition
Marginal Product of Labor (MPL)
50. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Determinants of elasticity
Production function
Profit Maximizing Rule